General continuing comments about how critical it is that the proposed bailout plan is approved as soon as possible. 

See Monday's Paulson Plan comments from Jim here...

See Tuesday's Paulson Plan comments from Jim here...

See Wednesday's Paulson Plan comments from Jim here...

Here are Thursday's comments from Jim:


Jim:    Now that it looks like we are close to passing, but I'm calling, the invest in American plan, also known unfortunately as Hank Paulson's $700 Billion Bail Out of Wall Street....I think my name has a much better ring to it, not to mention more accurate...the big question is who will be the biggest winners even if the plan is phased in....something I am perfectly happy with. We were up 196 points today because it looks like some version of the plan will pass. I know the bond market is horrible...come on, we've got to focus. But in this show we can get more specific than just the market and just to reiterate all week as we have since last Thursday, we are still in favor of selling into strength. And as I said on the Today show this morning and I have suggested to you for five days...you have go to cut 20% out of your equity portfolio. I hope you use this strength today. Things could still go haywire and the credit markets are still awful. But you know what, we are going to focus tonight on what works off the plan. We are going to presume that the plan works...cause we have liked it the whole way and also because I have been a relentless critic of everything this administration has proposed...all the little stuff like Tim Geikner and all those federal people, the reserve people. they have been completely wrong, they have totally let you down.

Anyway, the first company that people win the one that benefits the moment the government starts buying mortgages back paper or mortgages is...Fortress four member Bank of America: BAC, JPM, WFC & USB. See B of A or symbol BAC has already written down the loans that they bought from Countrywide, probably to be the lower they can sell them to the government...and are we in the process of writing down the debt from Merrill Lynch which I now think it stole because of the short rates driving Merrill Lynch down. As soon as the government starts buying this stuff, Bank of America (BAC) will be able to revalue up a lot of its paper. Now see they have already taken the hit, and they have taken it harder and more responsibly than any other player out there...even Wells Fargo. Valuing this stuff at much less than I think the government will pay for it.

So, even if Bank of America (BAC) doesn't sell a thing to the feds, the moment somebody else sells, they will be able to mark up the value of all of their mortgages they have had to mark down, because there is no doubt in my mind that the government won't be paying more than the price that Bank of America is valuing this stuff at. So what will happen instantly Bank of America (BAC) will be fat and happy with assets worth far more than they are currently priced which will then free up a great deal of capital letting them relending in...that's what the plan is all about. It's a good plan, and Ken Lewis, the CEO of Bank of America (BAC), he will be my hero.

The next one I look at is Wachovia Bank (WB), because Bob Steel the CEO and the former under secretary of the Treasury for Domestic Finance has a better handle on how this process will work than any other executive out there perhaps because he was in the government. He was Paulson number 2. I think Steel is ready to split Wachovia into good bank and bad bank. Give the bad bank to the government as soon as the plan passes and he is able to because he owns whole loans sold right to the government. In return for a stake by the government in new and old, good and bad Wachovia... which is really now in a very dicey situation thanks to all the bad mortgages in bought when it acquired Golden West in 2006. Wachovia is a winner.

Now here's one that you haven't thought of...I think that Goldman Sachs which as of last Thursday was Fuldman Sachs and now as of today, well at least since this crisis hit, up 50 points since last Thursday, now it's Goldman Slacks. Because it suddenly has both currency and the capital to be a gigantic national bank. Notice Washington Mutual (WM) stock today...tell me Goldman wouldn't want those sticky assets instead of slimy hedge fund deposits and I bet it can negotiate a deal that doesn't require the firm to pay up for WM if pay at all. Oh, and what the heck, let's start the Goldman to buy Wachovia talk again....as Bob Steel is an old Goldman hand, that's where I met him. And after weeks of gains, Goldman's now twice the market capital of Wachovia. That's hand and glove not the O.J. kind. And you wondered what they would do with their new found commercial status and new found partner of Warren Buffet...take advantage, buy a lot of commercial deposits.

Alright, let's get to the point here...whose the biggest winner? The biggest winner from this plan if it passes, the reason I call it the Invest in America plan...you, the American tax payer. If Paulson and a company ever promised a profit, you think there would be all of this hand wringing, but they're going to get one...that's right. Everyone acts like this is a $700 Billion give away to Wall Street plutocrats...but that couldn't be further from the truth. The plan has survived distressed mortgages because the US government is the only entity big enough to start buying this paper, create a market in it where previously no market existed and most importantly the government can sit with the mortgages forever and not risk a thing. The banks can't do that, ties up too much capital l, kills their earnings makes them frozen....you ever notice you can't get a loan...they're sitting on all these mortgages. You free up the mortgages, they'll lend. How easy will it be for us to make money on the plan....remember we're not buying nothing...so many commentators say "worthless mortgages" ...it's arithmetic...if you have a mortgage on a $300,000 home, and the house goes to $200,000, and you bid $150,000 for the mortgage as I expect the government to do...we are buying mortgages back by real homes...which still have value. you can live in them...that's good. They'll have even more value once the foreclosures stop. What we've lacked is a scale...something that can tell us what mortgages are worth. If we had that from the very beginning, other players might have been more willing to buy this stuff...only E*TRADE and CIT have ever given you these numbers. Because the SEC took a permanent intellectual vacation and didn't demand this.

Now all the government needs to do is set up the scale which will happen when the plan is passed and pay banks accordingly. It should be easy to do...the only real question being which loan should not be bought under any circumstances because some underwriters were so bogus and some buyers so speculative that buying their loans will be tantamount to the giveaway we keep hearing about. How do we eliminate that...I know how to do that to...hire Bill Gross and Pimco...let them administer it. Bill's already said that he and his team will do it for free...he is my guy. He knows more than anyone about this...you've seen him on the network...the wonderful and fabulous interviews him all the time...Bill Gross I trust...you should too...he is a good man.

I think the feds should even be able to deal with the extremely complex CDO's fabulous article in the NYT today that showed you how difficult they are to understand, but you can break them up...another myth...you can't break up the CDO's....you can buy them loan by loan if we buy them whole. Unwind them, don't buy them as a package. Buy the individual loans, then the taxpayers will do well. If we buy the whole CDO we'll get killed....you have to unwind those pieces of paper, they really clog the works. The way for the government to make money for taxpayers and help stop foreclosures with this Invest in America plan, is first buy the 30 year fixed mortgages in the areas with a lot of foreclosures. I think the government should by the most stable mortgages in the hardest hit areas....Florida and California...we have to keep those people in their homes, because every foreclosures just makes the situation that much harder to get out of.

Next the government should buy those teaser type loans....and only after those should we go and get that pick and pay which I hate, negative amortization, I hate, I mean I wish we can let all those people go because those are joke loans. If the government looks at this as a targeted investment to both stop foreclosures and get good value, you and I are going to come out ahead. Please no home equity loans should be considered. We will lose big money on home equity loans. With this plan we need to put more effort into getting certain areas to bottom so we can stop the reeling in so many major metropolitan areas......60 % of these loans are just in a couple of places, this is not rocket science. and those places represent great value already. I am telling you these are places you want to live. But the only way we can bring out the values is to stop the foreclosures first which this plan can do...I don't think people realize how easy it will be to clean up this mess once we get plan past and Paulson and Bernanke did us no favors by making it sound like it was the toughest thing, like it was advanced calculus, it was nuclear physics...that's they way they made it sound.

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The Bottom Line!:     I think he biggest winners from the Invest in America Plan, call it the Paulson Plan...whatever you want to call it.... are Bank of America (BAC), Wachovia Corp. (WB) and... believe it or not... you.